Because we usually assume positive interest rates in time value analyses, the present value of a three-year annuity will always be less than the future value of a single lump sum, if the sum of the annuity payments equals the original lump sum investment.

Question

Quizplus · Accepted Answer

If the interest rate is positive, the present value of the annuity will always be less than the future value of the single lump sum investment, regardless of the duration of the payments.

Because We Usually Assume Positive Interest Rates in Time Value